10-Q 1 hubg-20230930.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023 or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 0-27754

 

HUB GROUP, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

36-4007085

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

2001 Hub Group Way

Oak Brook, Illinois 60523

(Address, including zip code, of principal executive offices)

(630) 271-3600

(Registrant’s telephone number, including area code)

 

 

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Class A Common Stock, par value $.01 per share

 

HUBG

 

NASDAQ

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐

Indicate by check mark if Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☒ Accelerated Filer ☐ Non-Accelerated Filer ☐ Smaller Reporting Company Emerging Growth Company

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

On October 27, 2023, the registrant had 31,191,969 outstanding shares of Class A common stock, par value $.01 per share, and 574,903 outstanding shares of Class B common stock, par value $.01 per share.

 

 


 

HUB GROUP, INC.

TABLE OF CONTENTS

 

 

Page

PART I. Financial Information

 

Item 1. Financial Statements

 

Consolidated Balance Sheets – September 30, 2023 (unaudited) and December 31, 2022

3

Unaudited Consolidated Statements of Income and Comprehensive Income – Three and Nine Months Ended September 30, 2023 and 2022

4

Unaudited Consolidated Statements of Stockholders’ Equity – Three and Nine Months Ended September 30, 2023 and 2022

5

Unaudited Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2023 and 2022

 

Notes to Unaudited Consolidated Financial Statements

7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

11

Item 3. Quantitative and Qualitative Disclosures about Market Risk

17

Item 4. Controls and Procedures

17

 

PART II. Other Information

 

17

 

Item 1. Legal Proceedings

 

17

Item 1A. Risk Factors

17

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

17

Item 5. Other Information

18

Item 6. Exhibits

18

 

 

 

 

 

 

 

 

 

2


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

 

HUB GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

 

September 30,

 

 

December 31,

 

 

2023

 

 

2022

 

ASSETS

(unaudited)

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

Cash and cash equivalents

$

400,686

 

 

$

286,642

 

Accounts receivable trade, net

 

630,794

 

 

 

716,190

 

Other receivables

 

5,590

 

 

 

3,967

 

Prepaid taxes

 

19,095

 

 

 

16,987

 

Prepaid expenses and other current assets

 

26,649

 

 

 

32,914

 

TOTAL CURRENT ASSETS

 

1,082,814

 

 

 

1,056,700

 

 

 

 

 

 

 

Restricted investments

 

19,809

 

 

 

18,065

 

Property and equipment, net

 

789,842

 

 

 

783,683

 

Right-of-use assets - operating leases

 

193,698

 

 

 

102,114

 

Right-of-use assets - financing leases

 

3,142

 

 

 

1,194

 

Other intangibles, net

 

177,032

 

 

 

197,386

 

Goodwill

 

629,772

 

 

 

629,402

 

Other assets

 

22,023

 

 

 

21,537

 

TOTAL ASSETS

$

2,918,132

 

 

$

2,810,081

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

Accounts payable trade

$

345,451

 

 

$

344,751

 

Accounts payable other

 

15,368

 

 

 

15,563

 

Accrued payroll

 

26,088

 

 

 

66,669

 

Accrued other

 

124,860

 

 

 

132,324

 

Lease liability - operating leases

 

39,688

 

 

 

29,547

 

Lease liability - financing leases

 

2,060

 

 

 

1,175

 

Current portion of long-term debt

 

102,773

 

 

 

101,741

 

TOTAL CURRENT LIABILITIES

 

656,288

 

 

 

691,770

 

 

 

 

 

 

 

Long-term debt

 

243,834

 

 

 

240,724

 

Non-current liabilities

 

48,496

 

 

 

43,505

 

Lease liability - operating leases

 

165,229

 

 

 

78,557

 

Lease liability - financing leases

 

997

 

 

 

-

 

Deferred taxes

 

174,220

 

 

 

155,923

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY:

 

 

 

 

 

Preferred stock: $.01 par value; 2,000,000 shares authorized; no shares issued or outstanding in 2023 and 2022

 

-

 

 

-

 

Common stock

 

 

 

 

 

Class A: $.01 par value; 97,337,700 shares authorized; 41,312,185 shares issued in both 2023 and 2022; 31,188,571 shares outstanding in 2023 and 32,646,621 shares outstanding in 2022.

 

413

 

 

 

413

 

Class B: $.01 par value; 662,300 shares authorized; 574,903 shares issued and outstanding in both 2023 and 2022.

 

6

 

 

 

6

 

Additional paid-in capital

 

220,247

 

 

 

208,165

 

Purchase price in excess of predecessor basis, net of tax benefit of $10,306

 

(15,458

)

 

 

(15,458

)

Retained earnings

 

1,920,325

 

 

 

1,781,582

 

Accumulated other comprehensive loss

 

(167

)

 

 

(214

)

Treasury stock; at cost, 10,123,614 shares in 2023 and 8,665,564 shares in 2022.

 

(496,298

)

 

 

(374,892

)

TOTAL STOCKHOLDERS' EQUITY

 

1,629,068

 

 

 

1,599,602

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

2,918,132

 

 

$

2,810,081

 

 

 

See notes to unaudited consolidated financial statements.

3


 

HUB GROUP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

AND COMPREHENSIVE INCOME

(in thousands, except per share amounts)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenue

$

1,024,835

 

 

$

1,355,407

 

 

$

3,217,562

 

 

$

4,054,987

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Purchased transportation and warehousing

 

772,650

 

 

 

1,023,052

 

 

 

2,403,190

 

 

 

3,081,299

 

Salaries and benefits

 

138,503

 

 

 

137,666

 

 

 

417,757

 

 

 

395,904

 

Depreciation and amortization

 

36,065

 

 

 

33,542

 

 

 

106,899

 

 

 

97,075

 

Insurance and claims

 

11,681

 

 

 

17,615

 

 

 

36,041

 

 

 

37,553

 

General and administrative

 

24,146

 

 

 

34,382

 

 

 

76,445

 

 

 

93,819

 

Gain on sale of assets, net

 

(765

)

 

 

(8,588

)

 

 

(5,599

)

 

 

(21,097

)

Total operating expenses

 

982,280

 

 

 

1,237,669

 

 

 

3,034,733

 

 

 

3,684,553

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

42,555

 

 

 

117,738

 

 

 

182,829

 

 

 

370,434

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(3,537

)

 

 

(2,190

)

 

 

(9,623

)

 

 

(5,301

)

Interest income

 

2,838

 

 

 

40

 

 

 

6,302

 

 

 

50

 

Other, net

 

(188

)

 

 

(384

)

 

 

(81

)

 

 

(446

)

Total other expense, net

 

(887

)

 

 

(2,534

)

 

 

(3,402

)

 

 

(5,697

)

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

41,668

 

 

 

115,204

 

 

 

179,427

 

 

 

364,737

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

11,209

 

 

 

27,879

 

 

 

40,684

 

 

 

87,063

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

30,459

 

 

 

87,325

 

 

 

138,743

 

 

 

277,674

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

(31

)

 

 

(35

)

 

 

47

 

 

 

(31

)

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income

$

30,428

 

 

$

87,290

 

 

$

138,790

 

 

$

277,643

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

$

0.98

 

 

$

2.63

 

 

$

4.35

 

 

$

8.29

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share

$

0.97

 

 

$

2.61

 

 

$

4.31

 

 

$

8.21

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average number of shares outstanding

 

31,139

 

 

 

33,145

 

 

 

31,908

 

 

 

33,480

 

Diluted weighted average number of shares outstanding

 

31,493

 

 

 

33,521

 

 

 

32,208

 

 

 

33,807

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See notes to unaudited consolidated financial statements.

4


 

HUB GROUP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

Purchase Price

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A & B

 

 

 

 

 

in Excess of

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Additional

 

 

Predecessor

 

 

 

 

 

Other

 

 

Treasury

 

 

 

 

 

Shares

 

 

 

 

 

Paid-in

 

 

Basis, Net

 

 

Retained

 

 

Comprehensive

 

 

Stock

 

 

 

 

 

Issued

 

 

Amount

 

 

Capital

 

 

of Tax

 

 

Earnings

 

 

Income

 

 

Shares

 

 

Amount

 

 

Total

 

Balance June 30, 2022

 

41,887,088

 

 

$

419

 

 

$

195,603

 

 

$

(15,458

)

 

$

1,614,983

 

 

$

(203

)

 

 

(7,244,215

)

 

$

(260,155

)

 

$

1,535,189

 

Stock withheld for payments of withholding taxes

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(892

)

 

 

(63

)

 

 

(63

)

Purchase of treasury stock

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(945,497

)

 

 

(75,000

)

 

 

(75,000

)

Purchase of treasury stock from related party

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(430,121

)

 

 

(34,767

)

 

 

(34,767

)

Issuance of restricted stock awards, net of forfeitures

 

-

 

 

 

-

 

 

 

2,318

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(14,901

)

 

 

(2,318

)

 

 

-

 

Share-based compensation expense

 

-

 

 

 

-

 

 

 

4,736

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,736

 

Net income

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

87,325

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

87,325

 

Foreign currency translation adjustment

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(35

)

 

 

-

 

 

 

-

 

 

 

(35

)

Balance September 30, 2022

 

41,887,088

 

 

$

419

 

 

$

202,657

 

 

$

(15,458

)

 

$

1,702,308

 

 

$

(238

)

 

 

(8,635,626

)

 

$

(372,303

)

 

$

1,517,385

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance June 30, 2023

 

41,887,088

 

 

$

419

 

 

$

214,356

 

 

$

(15,458

)

 

$

1,889,867

 

 

$

(136

)

 

 

(9,910,177

)

 

$

(478,312

)

 

$

1,610,736

 

Stock withheld for payments of withholding taxes

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,324

)

 

 

(185

)

 

 

(185

)

Purchase of treasury stock

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(208,330

)

 

 

(17,326

)

 

 

(17,326

)

Issuance of restricted stock awards, net of forfeitures

 

-

 

 

 

-

 

 

 

475

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,783

)

 

 

(475

)

 

 

-

 

Share-based compensation expense

 

-

 

 

 

-

 

 

 

5,416

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5,416

 

Net income

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

30,459

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

30,459

 

Foreign currency translation adjustment

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(31

)

 

 

-

 

 

 

-

 

 

 

(31

)

Balance September 30, 2023

 

41,887,088

 

 

$

419

 

 

$

220,247

 

 

$

(15,458

)

 

$

1,920,325

 

 

$

(167

)

 

 

(10,123,614

)

 

$

(496,298

)

 

$

1,629,068

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance December 31, 2021

 

41,887,088

 

 

$

419

 

 

$

189,256

 

 

$

(15,458

)

 

$

1,424,634

 

 

$

(207

)

 

 

(7,317,058

)

 

$

(258,330

)

 

$

1,340,314

 

Stock withheld for payments of withholding taxes

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(69,132

)

 

 

(5,778

)

 

 

(5,778

)

Purchase of treasury stock

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(945,497

)

 

 

(75,000

)

 

 

(75,000

)

Purchase of treasury stock from related party

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(430,121

)

 

 

(34,767

)

 

 

(34,767

)

Issuance of restricted stock awards, net of forfeitures

 

-

 

 

 

-

 

 

 

(1,572

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

126,182

 

 

 

1,572

 

 

 

-

 

Share-based compensation expense

 

-

 

 

 

-

 

 

 

14,973

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

14,973

 

Net income

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

277,674

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

277,674

 

Foreign currency translation adjustment

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(31

)

 

 

-

 

 

 

-

 

 

 

(31

)

Balance September 30, 2022

 

41,887,088

 

 

$

419

 

 

$

202,657

 

 

$

(15,458

)

 

$

1,702,308

 

 

$

(238

)

 

 

(8,635,626

)

 

$

(372,303

)

 

$

1,517,385

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance December 31, 2022

 

41,887,088

 

 

$

419

 

 

$

208,165

 

 

$

(15,458

)

 

$

1,781,582

 

 

$

(214

)

 

 

(8,665,564

)

 

$

(374,892

)

 

$

1,599,602

 

Stock withheld for payments of withholding taxes

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(100,533

)

 

 

(8,003

)

 

 

(8,003

)

Purchase of treasury stock

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-